Is the bull market back? Fact-checking a fund's hedging note

The Telegram channel DeFi Capital (@mydefi_capital) published a note: bitcoin has bounced, the feed is talking about a bull market again, and the authors bought puts (insurance against a drop) expiring on 25 December. We checked every number against prices, the Fear & Greed index and the original posts. Almost everything holds up; three points need a correction.

In short, in our own words:

• The market moved quickly from summer panic to confidence, and well-known analysts are talking about a bull market again.
• The current drawdown (about 53%) is shallower than past bear markets (77–85%). It may be an ordinary correction inside a bull run, as in 2021, or it may not.
• We are about 900 days past the halving. In past cycles this stretch was often painful, so the authors want protection until year-end.
• They hold BTC and ETH, bought puts expiring 25 December and keep a stablecoin reserve. If prices fall, they buy more. If prices rise, they reset the protection higher.

Prices come from Coinbase daily candles, history from blockchain.info. Links to every source are at the end of the article.

What happened on days 850–1,000 after past halvings:

• 2016 halving: this was November 2018 to April 2019. It included the crash from $6,400 to $3,200, with the low on 15 December 2018.
• 2020 halving: this was September 2022 to February 2023. On day 850 the price was about $18,800, and the FTX collapse and the $15,500 low (21 November 2022) were still ahead.
• 2024 halving: day 850 was 18 August 2026 and day 1,000 will be 15 January 2027. We are on day 903.

More on cycles at /cycles, on on-chain metrics at /onchain.

A put is the right to sell bitcoin at an agreed price (the strike) until a set date. It works like insurance: you pay a fee (the premium), and if the price falls below the strike, the insurance pays the difference.

• If the price falls below the strike, the put gains value and covers part of the loss on the coins.
• If the price stays above the strike, the put expires worthless. The whole premium is lost, like paying for insurance you never claimed.
• Net hedge profit = what you sell the put for, minus the premium paid, minus fees and spread. The note gets this right except for the fees.

• If the price rises and the protection is reset higher, a new premium is paid each time. In a long rally the cost of insurance adds up.
• If the price falls but not to the strike, the puts still lose value over time. The protection only works below the strike.
• The coins stay put, but the premium money sits on the options exchange. That is platform (counterparty) risk.
• Put profits go into buying more on the way down. That means the protection is removed just as the market is falling, and risk goes up again.
• 25 December is Christmas. Trading and liquidity are thin that day, which matters when closing positions.

Strategies including DCA and hedging are collected at /strategies.

The note's numbers are mostly honest, and the authors themselves say the cycle comparison is not a countdown to a crash. Three things need correcting: greed in September reached 78, CoinGecko only cautiously suggested a bull market might be starting, and the Bull Score of 90 dates from 29 September. The claim about volatility spike gaps cannot be checked.